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Most economic analysts fear that an increase in minimum support price for food-grains will push up their prices in the market. On the contrary, in most situations, increase in MSP spurs production and benefits the consumer with sharp fall in prices.

For instance, the steady increase in MSP for sugarcane during the past 40 years has rendered an abundant supply of sugarcane to the sugar mills and, consequently, the increased availability of sugar has dampened prices of the sweetener in the market. The consumer is benefited with cheap sugar and inflation on this count is kept at bay.

K. P. Ganesan Chennai

More Stories on : Letters | Agricultural Policy

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